Sierra Leone government receives $16 million from World Bank to create jobs

Most credible economists would tell you that government does not create sustainable employment opportunities, only the private sector can.

They will further argue that the role of government is to create the necessary conditions that are conducive for private entrepreneurs to invest and create wealth and jobs for the unemployed.

The World Bank knows and understands this principle perhaps much more than most. Yet when it comes to propping up failing governments in Africa, they are ever so quick to take out their cheque books to provide massive sums of cash to corrupt regimes to create phantom jobs.

When president Koroma was elected in 2007, he received an overwhelming vote of confidence from the vast majority of the people, on the strength of his promise to create jobs for the longterm unemployed, especially the two million youths in the country.

As billions of dollars poured into Sierra Leone in support of Koroma’s Agenda for Change, today there is no evidence of the hundreds of thousands of jobs promised by the president.

With the exception of the mining industry that has created about 5,000 jobs since 2007, there are serious concerns that the capacity of the private sector to grow and flourish has been eroded by high interest rates charged by the banks, poor investment conditions, corruption and the lack of basic industrial infrastructure – such as reliable water and electricity supply.

Last month, a fruit processing and canning plant located in a newly built enterprise zone in Freetown, costing tens of millions of dollars in subsidy, had to shut down.

The Italian owners of the firm said that they cannot continue in business because of the lack of electricity and poor access to water, added to the problems caused by the Ebola crisis.

The company has lost millions of dollars in export sales, and the directors are now considering the longterm future of their business.

Most small to medium sized businesses in Sierra Leone have been under tremendous pressure to survive for the past three years, long before the start of the ebola crisis.

In 2011 the now sacked vice president – Sam Sumana (Photo) launched a glossy Private Sector Development Strategy on behalf of the Koroma government. But the strategy lacked vision, clear objectives, sense of purpose and an implementation plan.

The strategy never saw the light of day. It was killed prematurely, and four years on, the man who launched the strategy – the vice president, is now himself out of a job – sacked by the president – joining the 80% of youths that are unemployed in Sierra Leone.

Despite the continuing failure of the Koroma government to create a climate that is conducive for private sector investments, the World Bank and the IMF have continued to pour hundreds of millions of dollars into a big black hole for the government to create jobs, instead of direct support for the private sector.

Three weeks ago the World Bank announced another package of financial support for the Koroma government, totalling $16 million.

The World Bank says that the package of financial support is for two complementary social protection projects: A ‘Labor Intensive Public Works Project’ which will be financed through a grant costing $2.95 million; and a ‘Social Safety Net Additional Financing Project’, financed by an IDA grant costing $10 million, with co-financing of $3.11 million from the Ebola Recovery and Reconstruction Trust Fund (ERRTF).

Despite criticisms, the World Bank believes that this $16 million funding package will impact upon the country’s public administration, social services, primary education, health and other social services; and that the money is meant to establish the key building blocks for a basic national safety net system – providing income support to more than 5 million extremely poor people in Sierra Leone.

But what is not clear is what the ‘Labor Intensive Public Works Project’ entails.

Sierra Leone’s public sector wage bill is the highest cost facing the government every single year, which leaves most public sector workers going home without pay for several months, as the government struggles to find money to meet its obligations.

An already unproductive public sector in Sierra Leone does not have the capacity to employ more unskilled and uneducated people, who accounts for the bulk of the country’s population today.

The government has recently doubled the minimum wage for public sector workers, adding tens of millions of dollars to the public sector wage bill.

But as poor families continue to struggle to survive across the country, the World Bank says that its support is humanitarian.

It says that it will finance the scale up of social protection systems across the districts, and will ensure direct cash transfers to an additional 7,000 beneficiaries in five districts – an extension of the cash payment to the original 12,000 beneficiaries.

According to the World Bank spokesman – Sergiy Kulyk, $2.95 million will help mitigate the socio-economic impact of the Ebola outbreak in Sierra Leone, by providing temporary employment to youths in poor households.

But where are the job opportunities?

Critics of the government say that the government’s decision to borrow over $400 million for road construction has only benefitted those in power, through contract kick-backs and corruption. Not a single job has been created as a result of the newly constructed roads.

The same accusation is being levied against the government today for its proposed new airport, for which the government will have to borrow another $400 million from the Chinese.

Policy analysts say that this new airport will only benefit the Chinese, who will be charging the country’s tax payer millions of dollars for managing the airport as well as repayment of the $400 million loan at 50% interest.

Whilst a handful of unskilled jobs will be created at the new airport for heavy lifting and security, it is unlikely that new industries will cluster around this new airport.

As Sierra Leone’s private sector continues to face irreparable decline, so too is the country’s over-bloated public sector continuing to be unproductive and unfit for purpose. But the World Bank is hopeful.

After publishing this article yesterday, 4th October 2015, one of the directors of the fruit processing company – Claudio Scotto, wrote to the Sierra Leone Telegraph and said this:

‘I am one of the Italian entrepreneurs who own the juice factory in Newton. The factory is only temporarily closed as a result of unpaid debt, due to very high interest rates charged by the banks. We are currently finalising a debt restructuring agreement with the Bank.

‘The business is viable as many commercial farmers are now actively involved in the initiative and all items produced since 2012 has been sold to foreign customers. And with the right support, the factory will reopen very soon.’

WITH CORRUPTION EVERYONE PAYS

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